BEAUMONT ENTERPRISE - 2/4/12 New Oil Shale Plans

Feb 4, 2012

New oil shale plan limits Western research land

CATHERINE TSAI, Associated Press

Saturday, February 4, 2012

DENVER (AP) — The federal government's new plan for oil shale development on public lands would keep activity off thousands of acres of environmentally sensitive areas, with new leases initially being issued strictly for research on how to commercially produce oil from oil shale in Utah, Wyoming and Colorado.

The George W. Bush administration had made almost 2 million acres available for potential oil shale development and 431,000 acres for tar sands development, but federal officials took a new look after conservation groups filed a lawsuit in 2009 alleging the government hadn't fully reviewed possible environmental impacts.

A new draft environmental impact statement released Friday says the preferred plan now is to make 35,308 acres in Colorado, 252,181 acres in Utah, and 174,476 acres in Wyoming available for oil shale research. Also, 91,045 acres in eastern Utah would be available for activities related to tar sands.

Together, the total is around a half million acres. Areas with wilderness characteristics, core sage grouse habitat, areas of critical environmental concern, and the Adobe Town area in Wyoming are among those that would be off limits.

The public has until May 4 to comment on the proposal.

President Barack Obama's administration says its development proposal continues to encourage research.

"If oil shale is to be viable on a commercial scale, we must take a common-sense approach that encourages research and development first," BLM Director Bob Abbey said in a written statement.

"I see absolutely no benefit. This nonsensical, bass-ackwards, peek-a-boo policy is nothing more than political posturing by over-reaching federal bureaucrats," the governor said in a news release. "With no science and no data, and with a wave of their federal bureaucratic magic wand, they just take the bulk of the acreage off the market, stifle innovation, and demonstrate, yet again, that this administration is patently hostile toward even the possible development of much needed energy resources."

The Bureau of Land Management estimates the Green River Formation in Colorado, Utah and Wyoming has 1.2 to 1.8 trillion barrels of oil resources, but not all may be recoverable.

Getting petroleum-like substances out of oil shale, which is first mined, is tougher than pumping oil out of traditional wells, and companies haven't found an economic way to do it in the U.S.

Oil shale contains kerogen, which must be subjected to temperatures of more than 750 degrees before it can produce oil. Studies have indicated up to about 500 gallons of water may be needed to produce one barrel of oil from it, which could be an issue in the dry West, the Government Accountability Office has said.

Following recommendations from the GAO, the U.S. Geological Survey is analyzing baseline water conditions so it can better understand how commercial-scale oil shale development could affect groundwater and surface water systems.

The BLM in 2007 issued six leases of federal land in Colorado and Utah for research on how to make oil shale commercially viable. Three more applications are pending and wouldn't be affected by the plan announced Friday.

Tar sands contain bitumen, which can be refined into oil. Canada has a commercial tar sands industry, but its oil sands and processing requirements differ from those in Utah.

Energy companies had said they needed consistent regulations and pushed for the government to leave the Bush administration's plan alone.

"Within a week of encouraging an 'all of the above' energy strategy, the administration continues to introduce actions that delay and restrict development," American Petroleum Institute spokesman Reid Porter said in a written statement. "There has to be certainty, and the BLM draft plan is not conducive to an operating environment that encourages investment."

Shell Oil Co., which already has some research and development leases, said it's uncertain whether it could commit to any significant investments in such big projects "without regulatory certainty or a clear path forward."

However, Bill Midcap of the Rocky Mountain Farmers Union said research is still needed on how much water will be needed to turn oil shale into oil. "We already face a water shortage in the West that threatens farmers and ranchers," he said.

Vernon Lovejoy, a former BLM state director in Wyoming, said he also wants to know the potential effects on hunting, fishing and recreation, which hold up economies in rural and mountain towns in the West.

"I do believe oil shale can be developed in many places, as long as we realize the potential impacts before we enter into leases," Lovejoy said.

Earlier in the week, a House committee approved a bill from Rep. Doug Lamborn, R-Colo., that would require the Interior Department to offer far more land and leases for oil shale research and commercial production. It would allow lease fees and royalties to be reduced to encourage development.

Sen. Mark Udall, D-Colo., applauded the BLM's move, saying the demands that development would place on local communities and water still need to be fully understood. "While I have long felt there is potential for oil shale development, it is critical that a number of unanswered questions be resolved before commercial-scale leasing takes place," he said in a written statement.

Catherine flew with EcoFlight over the Piceance Basin in November while doing research for this article.